A Complete Guide to Applying for IOSS

2025-12-30 16:50:10

In recent years, EU cross-border e-commerce tax regulation has continued to tighten. VAT compliance has shifted from an “optional choice” to a “mandatory requirement.” Against this backdrop, more and more independent store sellers are asking an important question: Can an independent online store apply for IOSS?

The answer is yes.

As long as EU regulatory requirements are met, independent stores can—and should—apply for IOSS. In particular, for independent sellers who ship directly from non-EU countries such as China to EU consumers, IOSS has become a core compliance tool for low-value orders.

1. What Is IOSS? The Core Tax Mechanism for Low-Value E-Commerce in the EU

IOSS, short for Import One-Stop Shop, is a VAT simplification scheme officially implemented by the EU on July 1, 2021.

The core purpose of this system is to simplify the VAT collection and declaration process for non-EU sellers selling low-value goods (≤150 euros) to EU consumers.

Before IOSS, low-value goods in the EU were often exempt from tax or subject to inconsistent enforcement, resulting in significant tax revenue losses. After the introduction of IOSS, the EU clearly stipulated that:

Low-value goods are no longer exempt from VAT.
VAT is collected at the point of sale rather than at customs clearance.
Sellers are the primary parties responsible for tax compliance.

For marketplace sellers, VAT is usually withheld and remitted by the platform.
For independent store sellers, however, there is no platform withholding mechanism, making IOSS the most critical compliance pathway.

2. When Do Independent Stores Need to Use IOSS?

Not all orders must use IOSS. The applicable scenarios for IOSS are clearly defined and strictly regulated.

Independent store sellers should use IOSS when all of the following conditions are met:

The goods are shipped directly from outside the EU (such as China).
The customer is an EU-based consumer (B2C orders).
The declared value of a single order does not exceed 150 euros (excluding VAT).

For example, if you are a China-based independent seller selling a 12-euro accessory to a French consumer through your own website and shipping directly from China to France, this order fully qualifies for IOSS.

It is important to note that:

IOSS is determined at the order level, not by average order value.
Orders exceeding 150 euros cannot use IOSS and must follow traditional import VAT procedures.

3. Why Independent Stores Are Strongly Advised to Use IOSS

From a practical perspective, IOSS is not just a compliance requirement—it directly impacts fulfillment efficiency and customer experience.

From a tax management standpoint, IOSS consolidates VAT reporting across 27 EU member states into a single registration country, one tax number, and one monthly declaration. This greatly reduces tax complexity for independent sellers and minimizes compliance risks associated with multi-country registrations.

From a logistics and customs clearance perspective, parcels cleared under IOSS are considered “tax-paid shipments.” Customs authorities can identify the IOSS number and usually grant faster clearance, significantly reducing delays, holds, or returns caused by tax issues.

Most importantly, from the customer experience perspective, orders that do not use IOSS often require consumers to pay VAT and handling fees upon delivery. This negatively affects delivery success rates and undermines brand trust. Under IOSS, taxes are paid at checkout, offering a shopping experience closer to that of local e-commerce.

4. What Documents Are Required for Independent Stores to Apply for IOSS?

As non-EU entities, independent sellers typically need to register for IOSS through an EU intermediary. The required materials generally include:

Company registration documents proving legal existence, such as a business license.
Tax information demonstrating compliance in the home country.
Legal representative identification documents.
Bank account details for VAT payments and potential refunds.
Business information clearly describing the sales model (independent store), product types, and sales regions.

In addition, non-EU companies must appoint an EU-based IOSS tax intermediary. This is a mandatory EU requirement, not an optional one.

5. What Tax Obligations Do Independent Stores Have After Using IOSS?

Successfully registering for IOSS does not mean compliance ends there. Ongoing reporting is essential.

Under the IOSS framework, independent sellers must:

Submit IOSS VAT returns on a monthly basis, even if there are no orders (zero filing).
Ensure that all IOSS-cleared orders are fully and accurately reported, with traceable data.
Apply VAT rates strictly according to the consumer’s country.
Pay VAT to the IOSS registration country, which then distributes the tax to other member states.

It is important to emphasize that IOSS is not optional once used. Non-compliance may result in tax number suspension or even cross-border enforcement actions.

6. Which Orders Cannot Use IOSS? Common Misunderstandings

In practice, many independent sellers misunderstand the scope of IOSS.

IOSS applies only to orders that meet all of the following:

Shipped from outside the EU.
B2C transactions.
Single order value of 150 euros or less.

The following situations cannot use IOSS:

Orders with a value exceeding 150 euros.
Goods stored in EU-based warehouses.
Specially regulated goods such as alcohol, tobacco, or hazardous materials.

In addition, practices such as order splitting or undervaluation have become key audit targets for EU authorities in recent years and carry very high risks.

7. Poland IOSS or Italy IOSS? How Independent Stores Should Choose a Registration Country

In the market, Poland and Italy are the most common IOSS registration choices for independent sellers.

In terms of speed, Italy IOSS registrations are generally issued faster and are suitable for sellers who need to launch quickly. Poland IOSS registrations are relatively stable but typically take longer.

From a policy and operational stability perspective, Italy IOSS offers advantages in filing processes, system maturity, and support for international sellers. Poland IOSS may offer flexibility for certain product categories but is better suited for sellers with deeper tax expertise.

For most independent stores, prioritizing stability and service support is often more important than pursuing theoretical tax advantages.

8. Conclusion: IOSS Has Become Core Infrastructure for Entering the EU Market

IOSS is no longer optional. Under the EU’s tax reform framework, it has become a key mechanism for independent sellers to balance compliance, efficiency, and customer experience in low-value orders.

For independent stores that meet the criteria, applying for and properly using IOSS early can significantly reduce tax risks while improving logistics performance and customer satisfaction. As EU regulation continues to tighten, compliance itself is becoming a competitive advantage.

Truly mature independent store operations are no longer about whether you can sell, but whether you can sell sustainably, consistently, and compliantly. IOSS is an essential step on that path.